Ecommerce

An honest look at why people add items to their cart but never finish buying A woman looks through jackets on her phone during her lunch break. She found the website recommended by her friend and liked one of the jackets, so she added it to her cart. But then, she left. Perhaps the shipping cost was too high, or maybe the website crashed. It could have been any number of things, but now this woman is just another statistic. She is, in fact, one of the seven out of ten people who added products to their cart but did not end up purchasing them. This scenario plays out millions of times every day, in different stores, different countries, and different products. Most often, guides on reducing cart abandonment talk about easy solutions like better photos, fewer fields to fill, and trust badges. While these are all helpful, they only scratch the surface. This article, however, goes beyond easy solutions and tries to explain the psychology of purchasing and what exactly causes people to change their mind, based on research. 1. The Real Shape of the Problem Let’s begin with the most common statistic of them all, the seven out of ten. In reality, Baymard Institute has been tracking cart abandonment rates for years, and the number hovers around 70% annually, based on their research. While some of these abandoned carts are due to people browsing the site and comparing prices, or just getting distracted and leaving, these are all normal parts of the browsing process. A store can’t really do much about that. However, if we take those out, we can see the real issue. Figure 1: Reasons shoppers give for abandoning checkout Unexpected costs during the final stage are the most frequent reasons for cart abandonment, according to 48% of surveyed shoppers. This means that almost half of the people who give up on buying something online do so because of last-minute cost surprises. This represents not an edge case, but a broad chasm in the conversion fundamentals. Shoppers who start their purchase on a mobile device are much more likely to abandon their cart during checkout. Between 10-15% more mobile users than laptop users give up on the process due to the difficulty of the interface. This could mean small buttons, long forms, or poor autofill suggestions that are magnified on a tiny screen. To give some context to just how much this matters, global e-commerce sales are estimated to be worth over $5 T annually. With a 70% checkout abandonment rate, this means that trillions of dollars in theoretical sales are simply vanishing at the final purchase step. Of this lost revenue, a considerable chunk should be recoverable by addressing the most common pain points. 2. Know Your Numbers Before You Guess Figure 2: Average order value by category, in ₹ Your team must have a general idea of what conversion rate improvement tactics have worked and which have not. Even if you do not have hard analytics to back this up, you most likely already know the approximate conversion rate you are aiming for. However, there is not much use in only having a target figure if your team does not have any context for it. For most e-commerce companies, average conversion rates fall somewhere between 2.35% and 5.31%, with most categories having much narrower ranges. A women’s accessories shop and a men’s phone case store would have wildly different conversion rates. Luxury: Average order value (AOV) of ₹38,000 – ₹64,000. Conversion rate: Lower than average, witha  longer decision-making process Electronics: AOV of ₹45,000. Shoppers will research extensively before making a purchase. Fashion: AOV of ₹16,500 – ₹25,500 Higher returns and seasonality Beauty: AOV of ₹7,700 – ₹11,500. Lower AOV but higher repeat purchase rate If your conversion rate is within the average range for your category, there is not much need to overhaul your entire strategy just to improve by 1%. If your performance is at least 5% below the benchmark, there is likely an exact issue that you can resolve. This principle also applies to any other metric that your team tracks; always compare it to the relevant averages and only then decide whether it needs improvement. At the same time, always keep in mind that a significantly higher rate is not necessarily a good thing. In some cases, a rate that is 10% above the average for your category might be the result of skimming traffic that only ever buys on your site anyway. This is especially true for directories and marketplaces. 3. The Quiet Reasons People Decide What They Decide Figure 3: Eight psychological shortcuts shoppers use People do not really think about what they buy; most purchase decisions are made on a subconscious level through various psychological mechanisms. Scientists have been studying them extensively for years, and it is possible that your business already takes advantage of several of them without your team even realizing it. There is nothing wrong with using psychology to your advantage if you are aware of the ways in which you are doing so. Anchoring The first price that a shopper sees influences their perception of value, so a crossed-out “original” price next to a discounted one is useful in convincing the buyer that they are getting a good deal. Loss aversion Losing something is much more painful than gaining something of the same value is pleasant. This is why warnings about losing discounts or rewards are much more effective at persuading people than presenting them with an outright offer.  The decoy effect Giving customers three options, one of which is clearly worse than the other two, will drive them to purchase the “better” one instead of making them compare the two lower-value options. Choice Paralysis More options don’t always lead to more sales. Barry Schwartz’s research on choice paralysis shows that a larger selection can decrease purchase frequency because evaluating too many similar items can be exhausting before a decision is even made.